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Will new budget negotiations unravel the sequestration riddle?

By
Jack Moore

For the first time since the government shutdown ended two weeks ago, lawmakers
are sitting down at the table to negotiate over the fiscal 2014
budget.

A bipartisan House-Senate budget conference committee met Wednesday to begin discussing how to
avert a second year of automatic, across-the-board spending reductions from going
into effect.

Democrats and Republicans have remained at odds over how to account for the
sequester cuts
in their respective spending plans. But even though formal budget negotiations
have now commenced, experts and insiders are throwing cold water on any notion of
a comprehensive budget accord, or so-called "grand bargain," that would see the
cuts repealed or replaced.

What does that mean for federal agencies, managers and employees? Sequestration is
likely to stick around — at least in some form — and about the best
agencies can hope for is a small-bore deal that grants them some greater
flexibility in implementing the cuts, these experts said.

"Managers have to at least recognize the possibility that the second round of
automatic cuts may kick in and that they're unlikely to be able to recover what
they have lost through the first round," said Don Kettl, dean of the University of
Maryland's School of Public Policy. "But they may have more flexibility in
figuring out how to allocate it. And beyond that, who knows what deal may be
made?"

Grand bargain? Forget about it

The experts are clear on one front. The possibility of a "grand bargain" on the
budget, giving agencies long-term certainty over the direction of federal
spending,
is highly unlikely.

Budget experts and members of the committee, themselves, are downplaying any talk of a comprehensive budget
deal.

"I don't think much is going to come out of this at all," Stan Collender, a
partner with Qorvis Communications, told Federal News Radio. "No matter what
happened with the shutdown and the debt ceiling almost-debacle, the basic issues
about the budget continue to remain, and that is that Republicans don't want to
raise taxes and Democrats don't want to cut entitlement programs. And that only
leaves one other area of the budget to look at and that, unfortunately, is
appropriations where most federal agencies and employees get dollars to spend."

For much of the year, Democrats and Republicans have remained at odds over how to
account for sequestration in fiscal 2014 and are billions of dollars apart from a
compromise.

In their spending blueprint, Senate Democrats have called for replacing
sequestration outright with alternative cuts and tax increases, allowing spending
to remain at about $1.058 trillion. The House Republican budget lowers spending to
$967 billion, the level allowed for after a second round of sequestration,
although it shifts funding to Defense to spare it from further reductions.

But Collender pointed to even more fundamental disagreements about the overall
purpose of the federal budget: Whether its focus should be on continuing to
stimulate the stalled economy or to continue reducing the deficit.

"It's not a question of compromising between two people on the same playing
field," he said. "It's not even clear they're in the same game, and that's what
the problem's going to be."

Sequestration here to stay?

Such chasmic disagreement makes it unlikely that Congress will be able to come up
with an alternative to sequestration's harsh budget-cutting mechanism.

"The real problem with the sequester is that everybody hates it, except everyone
hates all of the alternatives even more," Collender said.

Kettl agreed that a continuation of sequestration seems likely, albeit with some
adjustments to blunt its impact.

"In some ways, the most likely outcome of this may very well be locking into place
sequestration that is scheduled to occur but to give agencies more flexibility in
figuring out how to manage it," he said.

Collender agreed that that outcome is probably the "ultimate fallback" for
Congress: Keep the sequester in place but make it a little less painful.

"One of the alternatives may be to ... allow both domestic and defense agencies a
bit more flexibility so that they can determine priorities, and some things get
more money and others get less as long as the top line stays the same," he added.